What Happened?
Shares of young adult apparel retailer Tilly’s (NYSE: TLYS) jumped 10.8% in the afternoon session after Federal Reserve Chair Jerome Powell signaled potential interest rate cuts in a speech at the central bank's annual symposium in Jackson Hole, Wyoming. The comments sparked hopes for a looser monetary policy, igniting a significant rally across major indexes. The Dow Jones Industrial Average jumped by more than 1.9%, while the S&P 500 rallied 1.5%. Powell's remarks about being open to lowering a key interest rate in the coming months led to widespread positive sentiment among investors. With no company-specific news released, Tilly's shares appeared to be carried higher by the strong market-wide tailwind.
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What Is The Market Telling Us
Tilly’s shares are extremely volatile and have had 75 moves greater than 5% over the last year. But moves this big are rare even for Tilly's and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 8 days ago when the stock dropped 9.4% on the news that a hotter-than-expected wholesale inflation report fueled concerns about slowing consumer spending. The market was rattled by a Labor Department report showing the Producer Price Index (PPI), a measure of wholesale inflation, jumped 0.9% in July, significantly exceeding economists' expectations of a 0.2% rise. This was the largest monthly increase since March 2022, reigniting worries that businesses will be forced to pass higher costs on to consumers, who are already showing signs of price sensitivity. This inflation data has fanned concerns that U.S. tariffs on imported goods could start to translate into higher prices for shoppers. The inflation report landed amid growing evidence of consumer caution, with recent reports highlighting that shoppers are cutting back on non-essential spending, seeking out sales, and trading down to cheaper brands.
Tilly's is down 61% since the beginning of the year, and at $1.78 per share, it is trading 69.8% below its 52-week high of $5.90 from August 2024. Investors who bought $1,000 worth of Tilly’s shares 5 years ago would now be looking at an investment worth $288.96.
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